Spain 'to revise down growth forecast and seek more time to cut deficit'

Spain will revise down its economic growth forecast for 2013 next week and
seek more time from the European Union to reduce its budget deficit, as a
recession cuts deeper than previously expected, according to reports.

Spain will increase its 2013 deficit target to 6pc of GDP, from an existing forecast of 4.5pcPhoto: Reuters

Spain's gross domestic product (GDP) will be forecast to shrink by 1pc, rather than 0.5pc, a government source told Reuters, adding that the ruling party intended to shift emphasis to growth rather than deficit reduction.

Spain is negotiating with the European Commission for more time to bring its deficit within 3pc of GDP, something it is currently expected to do by 2014, the source said.

Spain will increase its 2013 deficit target to 6pc of GDP, from an existing forecast of 4.5pc. The figures on growth and the deficit could still vary by one or two decimal points, depending on the outcome of talks with the Commission, the source said.

The Spanish government is now trying to balance control of state finances with more growth-oriented policies, the source said.

"We're looking into finding a middle way. In this respect, having some leeway on the deficit targets would be a good message to send to the markets."